SINGAPORE (Reuters) – The energy industry’s bet that a petrochemicals boom would support decades of oil and gas sales growth is on shaky ground as an already saturated plastic market is hit by a coronavirus demand shock.

While soaring demand for personal protective equipment and takeaway food containers has boosted sales of some plastics, it is likely to be only a temporary spike, say analysts.

In the longer term, a virus-led hit to economic growth in Asian, African and Latin American markets threatens demand at a time when the industry is already facing bans on single-use plastic that are spreading across the world.

Plastic resin prices, which have been declining over the past two years, have plunged further since the coronavirus hit, an added challenge for investments of hundreds of billions of dollars in petrochemical capacity over the past decade.

“The petrochemicals world has been hit by a double whammy,” said Utpal Sheth, Executive Director, Chemical and Plastics Insights at data firm IHS Markit.

“Capital investment has been slashed by all companies. This will delay the projects under construction and new projects.”

(Graphic: Key plastic-making ingredient prices fall to historic lows in China as Covid-19 spread here)

Dow Inc said in April it would idle three U.S. plants producing polyethylene, the base for plastic bags and bottles.

Thailand’s PTT and South Korean partner Daelim have indefinitely delayed an investment decision on a $5.7 billion project in Ohio, three industry sources said. The companies did not respond to request for comment.

A massive Pennsylvania plastics project, owned by Shell, that President Donald Trump touted during a visit last year faces risks of oversupply and a low price outlook, an energy industry report said on Thursday.

Dow and oil majors Exxon Mobil, Royal Dutch Shell, Chevron and BP declined to comment on demand forecasts for this story.

MARKET TROUGH

Still, there are 176 new petrochemical plants planned for the next five years, with nearly 80% of those in Asia, according to energy consultancy Wood Mackenzie.

Many plants under construction or late in the planning stages can’t be rolled back without incurring massive losses.

Exxon in April kicked off construction on a $10 billion project in China, while Shell and state-owned China National Offshore Oil Corp last month approved the expansion of one of the country’s biggest ever petrochemical complexes.

Chinese firms are reviving a $20 billion project in eastern Shandong province to help support a flagging economy, Reuters exclusively reported this week.

“Even before the coronavirus outbreak, we were already expecting to see various petrochemical value chains … heading into an oversupply situation,” said Catherine Tan, principle analyst at Wood Mackenzie.

Significantly reducing the wave of new capacity would take years, raising the chances of a prolonged plastic price slump, industry sources said.

(Graphic: Global polyethylene production capacity by regihere)

ENVIRONMENT FEARS

As they come under financial strain, some plastic producers have requested rescue funds from governments, while industry groups have lobbied lawmakers to roll back bans on single-use plastic, arguing it protects people from disease and germs.

The U.S. Plastic Industry Association wrote a letter in March to the U.S. Department of Health calling for a reversal of plastic bag bans, arguing that single-use plastic was the safest way to transport and package food.

However, a New England Medical Journal study in March found the coronavirus was still detected on plastic after 72 hours, compared with up to 24 hours on cardboard and copper.

With the price for virgin, or non-recycled, plastic now at historic lows and oil demand withered, environmentalists fear that producers will pump out cheap plastic to stoke demand and soak up some of the global glut of cheap oil and gas.

Plastic waste is already piling up in parts of Asia as people use more disposable packaging under coronavirus lockdowns, and recyclers struggle to operate.

“We will see a flood of plastic waste. Even if that wave isn’t sustained, the plastic that gets pushed out now will pollute the planet for decades,” said Carroll Muffett, head of the Center for International Environmental Law, an NGO.